The board of management of Inverness College will today announce plans to develop a new site at Beechwood Farm between the A9 and Inverness-Perth railway line.
The scheme will form part of a 110 million project to create an academic and business campus, which, supporters say, could attract investment of about 300m and be vital in retaining the next generation of young people in the area.
Last month, councillors approved in principle the first phase of the plan submitted by Highlands and Islands Enterprise (HIE), which intends spending 25m on the project over the next five years.
It will include facilities for the proposed University of the Highlands and Islands (UHI), Inverness College, Scottish Agricultural College and an expanded Centre for Health Science, as well as student accommodation, a hotel and business and sports units.
Many local politicians have backed the move, but businesses in the centre of the city warn that they will lose vital custom from the college, which has about 7,000 further education students, 1,700 full- and part-time higher education students and 540 staff.
Garek Begg, chairman of the Inverness Business Improvement District (BID) group, which represents 800 firms, said: "What has concerned us is the critical mass of shoppers in a city centre can be impacted by something like this.
"We have been fighting for economic regeneration in the city centre, but when you take a lot of well-paid public servants, as well as the students, and stick them out on the periphery, what is going to be left for us?
"Undoubtedly there are businesses that are shaky at the moment, and this will be another straw that could eventually break the camel's back."
The college said the decision followed extensive consultation over the past year.
The Inverness College chairwoman, Mo Shepherd, said: "Following a lengthy and necessary deliberation process, it is with a great degree of pride and excitement we're able to announce the planned location of our new 21st-century campus.
"Both potential sites were viable for our plans," she said. "However, on balance, it was decided that Beechwood offers us an opportunity to realise our vision for a new, modern, tertiary education facility, which will be the pride of Inverness and of the wider Highland region."